What To Do If You Have A Bad Credit History
A bad credit history can be greatly unsettling and it’s something that you might only find out when you’re eventually refused a loan or mortgage that you desperately need. Many people feel helpless and confused when they realise that their credit history is less than ideal and they’re categorised as being unreliable or untrustworthy. As it’s not something that you’re necessarily taught at school, knowledge on the world of credit often comes from trial and error or learning from the lessons of others. If you have a bad credit history or think you might, here are four simple things that you can do to help yourself out of it.
1. Find out the Cause
There are many things that can cause blemishes on your credit history and some of them you might not even know about. Bad financial behaviour like failing to meet payments on time or having legal action taken against you because you have breached a contract can leave serious marks on your record. The less obvious problems actually come from not borrowing at all. This means that lenders cannot asses your reliability because your credit record is very short or doesn’t exist at all. Similarly if you only borrow small amounts for a short time you can have a worse credit history than those who have taken out loans of large sums for longer. This is because, ultimately, loan companies want to make money so if you can show that you can afford to pay interest on top of your repayments then you are more attractive to them. If you find out that your credit record is bad, then it’s important to first identify what may have caused it so that you can take the right steps forward.
2. Seek Advice to Improve
Next you should seek advice from money advice agencies or from friends or family you know that manage their money well or are in the financial sector. Beware of credit companies who constantly advertise that they can ‘solve all of your credit problems’ and ‘erase bad credit’ as many of them are likely to be scams. The fact is that there are no quick fixes when it comes to improving your credit rating. It takes time, patience and conscious effort with a disciplined budget or debt plan.
3. Make Some Changes
When you have a plan, it’s time to actually implement some changes into your lifestyle and money management habits. There are many ways you can do this depending on what problems you have. One easy way to help payments get transferred on time is by setting up payment reminders on your bills or signing up for direct debit, but make sure you monitor that you have enough in your account first so that you don’t get charged with nasty overheads.
4. Research Your Options
If you are refused a loan or insurance, don’t be afraid to ask for a report on why the company has made this choice. You are entitled to a report within 60 days of receiving the notice so be sure to do some research on your record. Some companies offer special deals for those with poor credit history such as guarantor loans so don’t worry as there are still options available to you. Credit report companies can also provide you with a free credit summary that will help you to spot inaccuracies in your rating.
Navigating the money minefield is tricky business especially if you’re on a tight budget or have been in troublesome situations in the past. But you don’t have to let it hold you back forever and with these simple tips you can move forward into a better financial future.